Chelmsford, state see no 2017 sales tax holiday

Tuesday

Aug 8, 2017 at 12:54 PMAug 9, 2017 at 12:57 PM

THE ISSUE Lawmakers have rejected a sales tax holiday for the second consecutive year, citing the need to preserve revenues.

THE IMPACT The sales tax holiday is a source of debate, with supporters saying it helps both consumers and businesses, but critics concerned about a loss of revenues, including for mass transportation needs. It is a key facet in the decades-long debate over sales tax in the state.

Margaret Smith msmith@wickedlocal.com @chelmsford

On a busy Monday afternoon, shoppers were going to and from the Walmart at the Drum Hill plaza, picking up dinner items or even some early back-to-school necessities.

Among them were Ivy Rashid, of Lowell, and her family.

Walmart is a major consumer draw both for area residents for almost every need, from lunch boxes to home goods.

Sales tax can pose a challenge in adding up costs, and Rashid, a social worker for the state, said she would probably welcome a sales tax holiday this year.

Asked what she might buy, Rashid said, "A TV."

Asked why a television would be her key purchase, Rashid laughed and said, "When you buy it, it's so expensive."

But critics of a sales tax holiday argue that it may save a few dollars for consumers, but it deprives the state of needed revenues for services. "That makes sense," Rashid said. "But it's still the person's dollars, so in a way it's like a revolving door."

In any case, this year, as last year, there will won't be one, but the conversation about the sales tax holiday -- and sales tax in general -- is far from over.

Lawmakers have opted for a second year in a row to reject a sales tax holiday -- outlined this year in a bill filed by Gov. Charlie Baker for a sales tax holiday weekend Aug. 19-20, for purchases of items under $2,500.

However, preliminary ballot language filed by retail leaders means voters in the 2018 elections may have a say in whether to reduce the sales tax overall, and whether to make the sales tax holiday permanent.

Revenue Committee Chairman Jay Kaufman confirmed that August will pass without what has been in recent years a semiannual tradition of suspending the sales tax for one weekend.

"I would say that's certain. I don't see how there could be one since there's no possibility of us having a hearing and a session to vote for one, so there will be no sales tax holiday this year," Kaufman, a Lexington Democrat, told the News Service on Aug. 7. Kaufman represents the Fifttheenth Middlesex District, which includes Lexington and Wards 1 and 7 of Woburn.

House Speaker Robert DeLeo and Senate President Stan Rosenberg had strongly indicated the sales tax holiday was not on their agenda after Baker tried to revive the issue last week by filing his own sales tax holiday legislation.

"We've heard from a lot of folks who said to us that this is really important to them," Baker said in a recent news radio interview. "It's important to downtowns, it's important to main streets, and we just think it's the right thing to do."

DeLeo said it made "little sense" for the governor to file a new sales tax holiday bill when other similar bills were already pending before committee, and Rosenberg said he would wait for the recommendations from the committee.

Chris Dempsey, director of Transportation for Massachusetts, debated the sales tax holiday on Greater Boston Monday with Jon Hurst, president of the Retailers Association of Massachusetts.

Rather than providing a major stimulus, Dempsey said the holiday only "shifts purchases around" and doesn't create "a lot of new spending."

Hurst said the holiday is a "life preserver" for business that have a "six and a quarter percent anchor around their neck."

Retailers this month filed potential 2018 ballot questions with the goal of both reducing the sales tax and making the sales tax holiday weekend permanent.

Many factors

Sen. Michael Barrett said it's important to weigh the costs versus benefits of a sales tax holiday.

"I think it has to be looked at year to year. It has to do with the very specific facts of the situation," said Barrett, Democrat of Lexington, who represents the Third Middlesex District in the Senate. The district includes Chelmsford, Bedford, Carlisle, Concord, Lincoln, Precincts 3,8 and 9 of Lexington, Waltham, Weston and Precincts 1, 4 and 5 of Sudbury.

This year, Barrett said he does not support a sales tax holiday, citing the loss of revenues that would result in a challenging time. What's more, Barrett said he does not think it would gain very much for consumers or businesses. "In Chelmsford, and other places, I spoke to local businesses and got back that the answer, 'I do not support a sales tax holiday.' That is what I heard in Chelmsford," Barrett said.

Of all the communities in the district, Chelmsford is closest to New Hampshire, where shoppers sometimes head for sales tax relief. But Barrett said, of the municipal officials he spoke to, "What they have said to me, is that people go over the New Hampshire border and other places as they have since the salex tax started about 40 years ago."

This year, Barrett said, "The budget has really encountered head winds. Capital gains tax really hasn't come in. We really struggled to balance the budget. So this is a bad year to give up $25 to $30 million," said Barrett of the estimated loss a sales tax holiday might mean.

"When I went looking for a sound business case, I was told the purchase of street-level retails business has moved to New Hampsire a long time ago. People are not buying fridges, oven ranges, big electronic purchases near the New Hampshire border. My sources tell me that people in the Chelmsford enivrons had north to New Hampshire, and that was an important bit of perspective," Barrett said.

In other parts of the district, Barrett said, "People do not travel to New Hampshire to avoid the sales tax on any weeklend of the year. The southern part of the district is relatively prosperous. That makes the difference around Lexington, Lincoln and Concord making the trip up to New Hampshire because of the sales tax."

Barrett noted, "I have an important shopping district in Waltham, and in Bedford, Concord and Lexington as well. Not a single small business owner has asked me to sit down and go over the numbers to make the case that the sales tax hurts local retail."

In some years, Barrett said a sales tax holiday might make some sense, "as a symbolic expression of support of small and large businesses...I consider myself pro-business. I don't want to communicate anything other than that. So you consider the overtones and connectoins as well as the substance before you make the final decision. I reserve judgement for the future."

When the question of a sales tax holiday this year was posed on the Chelmsford Independent Facebook page, one reader said a sales tax holiday isn't necessary, while others said they would support a permanent one.

The sales tax is the state's second largest revenue source, behind the income tax, which generated $14.696 billion in tax revenues during fiscal 2017.

The proposed income surtax, a constitutional amendment that some have labeled the millionaire's tax, would add a 4 percent surtax on annual income above $1 million, with the resulting revenues targeted for spending on education and transportation only. Supporters say it could raise $2 billion a year.